Aviva 2013 Annual Report Download - page 244

Aviva plc
Annual report and accounts 2013
Notes to the Company’s financial statements
242
A – Investments in subsidiaries
(i) Movements in the Company’s investments in its subsidiaries are as follows:
2013
£m
2012
£m
Fair value as at 1 January 31,023 28,889
Movement in fair value 2,072 2,134
At 31 December 33,095 31,023
Fair values are estimated using applicable valuation models underpinned by the Company’s market capitalisation, and are classified
as Level 2 in the fair value hierarchy described in note 23 to the Group consolidated financial statements.
(ii) At 31 December 2013, the Company has two wholly owned subsidiaries, both incorporated in the UK. These are General
Accident plc and Aviva Group Holdings Limited. Aviva Group Holdings Limited is an intermediate holding company, whilst
General Accident plc has preference shares listed on the London Stock Exchange. The principal subsidiaries of the Aviva Group
at 31 December 2013 are described in note 62 to the Group consolidated financial statements.
B – Operating expenses
(i) Operating expenses
Operating expenses comprise:
2013
£m
2012
£m
Staff costs and other employee-related expenditure (see below) 194 208
Other operating costs 156 96
Net foreign exchange (gains)/losses (24) 29
Total 326 333
(ii) Staff costs
Total staff costs were:
2013
£m
2012
£m
Wages and salaries 84 143
Social security costs 8 12
Post-retirement obligations
Defined benefit schemes (see (iii) below) — 1
Defined contribution schemes 11 12
Profit sharing and incentive plans — (2)
Equity compensation plans (see (iv) below) 11 32
Termination benefits 80 10
Total 194 208
(iii) Pension costs
The Company is one of a number of UK companies being charged for its employees participating in the Aviva Staff Pension
Scheme, and its contributions are affected by the financial position of the scheme. There is no contractual agreement or policy for
charging the net defined benefit cost for this scheme across the participating Group entities but, instead, this cost is recognised
in the financial statements of the main UK employing company. The Company therefore recognises a pension expense equal to
its contributions payable in the year for its staff, together with the service cost of any unfunded benefits, within staff costs above.
Full disclosure on the Group’s pension schemes is given in the Group consolidated financial statements, note 49.
(iv) Equity compensation plans
All transactions in the Group’s equity compensation plans involve options and awards for ordinary shares of the Company. Full
disclosure of these plans is given in the Group consolidated financial statements, note 32. The cost of such options and awards is
borne by all participating businesses and, where relevant, the Company bears an appropriate charge. As the majority of the charge
to the Company relates to directors’ options and awards, for which full disclosure is made in the Directors’ Remuneration Report,
no further disclosure is given here on the grounds of immateriality.
(v) Termination benefits
The £80 million of termination benefits recognised during 2013 relate to costs borne by the Company as part of the Group’s
transformation programme, which is referred to in note 7 of the Group consolidated financial statements.